HUD’s Canal Corridor Initiative in 1990s a hit or miss exercise

In 1999, then HUD secretary Andrew Cuomo, right, and Dan Glickman, who was then the U.S. agriculture secretary, and Cuomo’s children visit the Erie Canal in Pittsford.
(Photo:
Staff file photo 1999
, )

To be constructed in Lyons, the center was to include art galleries, offices, shops, restaurants and the public library branch. The Wayne County center was one of a multitude of projects envisioned along the Erie Canal that would be funded by a combination of grants and loans from the federal Department of Housing and Urban Development, known as HUD.

It didn’t happen.

“We secured $20-some million in grants for communities in Wayne County — one of the highest awarded counties in state,” said James Coloumbe, the now-retired senior Wayne County planner. “Unfortunately, in the end it became problematic and increasingly difficult to implement some of the grants.”

In 1997, then HUD Secretary Andrew Cuomo launched the Canal Corridor Initiative, designed to spread $131 million to 57 communities along the Erie Canal and connecting waterways. The program could create a tourism draw similar to San Antonio’s Riverwalk or Baltimore’s Inner Harbor, said Cuomo, who is now New York’s governor.

The legacy of the program is mixed. Unquestionably, some communities used the HUD grants and loans to transform their canal fronts into tourist and boater-friendly areas. But the initiative was also promoted as a job creator, and there is little evidence that its lofty employment projections were met.

Sixteen miles west of Lyons, the village of Palmyra harnessed $2.6 million in HUD grants and loan assistance to construct the current Port of Palmyra Marina. Some boaters stay there for days, using the location as a hub for travels, said the village’s former mayor, Vicky Daly.

“Without the HUD money, none of this would have happened,” she said.

While the projects envisioned by some communities may not have materialized, Palmyra rallied around the canal plans. A village-employed crew built the canal comfort station, complete with showers and restrooms, because privately contracting the project was cost-prohibitive.

A restaurant, Muddy Waters Cafe, now operates on the canal front.

“Because of the HUD (assistance), things got started,” Daly said.

Partisan politics

Within several years of the launch of the Canal Corridor Initiative, its effectiveness was already under challenge.

In 2001, HUD’s inspector general reported that the initiative was plodding along, and was slow to meet projected job creation numbers. Part of the problem, the inspector general determined, was that many communities were ill-prepared to deal with specialized loans that were a centerpiece of project funding.

Without improved monitoring of the loan and grant program “slow program progress may continue unabated, and the potential for realizing program goals and objectives will be in jeopardy,” the inspector general report said.

Partisan politics also entered the mix, stalling some projects, according to officials in some communities along the canal.

Some observers think that Republicans didn’t want success for the Democrat Cuomo, who many suspected had his eye on statewide office in New York. Conversely, Democrats thought that Republican Gov. George Pataki wanted to grab some of the spotlight.

In 2001 a group of Republican lawmakers from Adirondack towns and villages called for the canal program to be scrapped, saying it was failing miserably. Democrats retorted that GOP lawmakers were the ones impeding progress.

“It’s sad to see the Republicans call for the program to be ended when they know that Gov. Pataki already killed the program for political reasons,” a HUD spokesman said. A Pataki spokesman answered that the program was not dead.

“The good news is we have a lot of experience cleaning up Cuomo messes,” he said, alluding to Pataki’s gubernatorial victory over Mario Cuomo, Andrew Cuomo’s father.

Still, there was bipartisan cooperation.

Former U.S. Sen. Alfonse D’Amato, a Republican, was a supporter, joining Cuomo at news conferences. And former Syracuse-region Congressman Jim Walsh, also a Republican, helped energize some projects that appeared to be mired in bureaucratic quicksand.

With a Baldwinsville project, for instance, “I had to intervene because the money didn’t flow properly, at least as they anticipated,” said Walsh, a canal booster whose legislation led to federal National Heritage Corridor designation for the canalway.

HUD did not answer questions submitted to it about the success of the Canal Corridor Initiative. Gov. Cuomo’s office also did not respond to a request for comment.

One community, two stories

In Lockport, one can hear the pros and cons of the HUD initiative, tales of the promises that were met and the bureaucratic labyrinth that sometimes created maddening hurdles.

One rundown street in the city is becoming a center hub of commercial activity and is rebranded Canal Street, said Chuck Bell, the city’s director of planning and development.

“It took quite some time actually, but we’re now seeing the fruits of that labor,” Bell said. “Some properties had to be demolished.”

Lake Effect Ice Cream, an artisan ice cream production and scoop shop, moved into one building and “they’re just exploding now with activity,” Bell said.

With growing commercial possibilities along the canal, Lockport may be one of the communities which, years after the initiative, is seeing the job-generating fruits of the Canal Corridor Initiative.

In one refurbished building “we’re looking at the potential for a boutique hotel, which would be perfect,” Bell said.

Mike Murphy, who runs Lockport Locks and Erie Canal Cruises, received a loan of about $800,000 to bolster his canal cruising business. The business has mushroomed since then, growing from five employees to 65.

But, Murphy said, securing the loan, which he paid back at 6 percent interest, was a constant headache.

“It took about 21/2 years to get the money — a lot of aggravation and a lot of sleepless nights,” said Murphy, who thinks his business would have grown without the HUD help.

Constant demands for paperwork and information were impediments to getting the money in hand, Murphy said. Instead, he used credit cards during the time he waited for the loans.

He transformed a steel fabricating shop into an office and headquarters for his operation.

“By the time we got the (HUD) money ... we had it all done,” Murphy said. “To do this HUD (loan), we probably wore out one or two copiers. They didn’t make life easy for us.” He said once he received the loan money, he used it to pay himself back.

When the Canal Corridor Initiative was announced, Murphy joined Cuomo at a news conference where Murphy was handed a large symbolic check.

“We didn’t get the check,” Murphy said of the large symbolic version. “They kept it.”